VAN EDI technology empowers your business to effortlessly share data with multiple trading partners within a private, secure network.
For decades, value-added networks (VANs) have served as pivotal bridges in the electronic data interchange (EDI) ecosystem, facilitating seamless and secure communication between businesses. As the digital backbone of countless B2B transactions, understanding the role and evolution of VANs is essential for anyone navigating the complex landscape of electronic commerce.
By strategically incorporating EDI VANs into your business model, you can streamline the flow of information between your organization and its trading partners, elevate productivity, and optimize data security. Most importantly, EDI VANs hold the key to achieving and maintaining supply chain excellence.
Whether your organization is already EDI-capable or contemplating electronic data interchange technologies for the first time, it’s wise to familiarize yourself with VAN EDI.
What is a VAN in EDI?
VAN in EDI stands for “value-added network.” It’s a type of EDI-deployment strategy that involves exchanging information over a private hosted service. With a VAN, you can send and share data with multiple trade partners over your own secure network.
Think of VAN as the channel your EDI documents flow through. It’s a form of middleware that transfers documents as they’re sent. VANs provide a wide range of services, including message encryption, management reporting capabilities, and secure email.
Within supply chain management, VANs facilitate the exchange of EDI documents over a secure network, promoting efficiency and accuracy. Buyers, sellers, and third-party logistics providers (3PLs) can all leverage VANs to support EDI-based transactions.
How does EDI VAN work?
Large organizations typically use a VAN system to promote supply chain management efficiency. Telecommunications companies and industry consortiums also use VANs.
Although VANs can be configured in several different ways, they almost always function in a mailbox-style setting. Correspondence flows in and out of the VAN, similar to email. However, email transfers are used to transmit unstructured text, whereas VANs are used to send and receive standardized, structured data, such as EDIs.
Once an EDI VAN provider assigns you a secure mailbox, you and your trading partners can begin exchanging EDI transactions. When you send an EDI document to one of your partners, it will be stored in the VAN. The recipient's technology platform will then “contact” the VAN, retrieve the correspondence, and send its own transaction.
Why Should You Use an EDI VAN?
VAN EDI technology provides a secure, convenient communication channel between trading partners. But, that’s just one of its many functions.
EDI VANs support various tasks, including data validation, authentication, reporting, encryption, and EDI translation. Your EDI VAN may provide numerous additional services, depending on the provider you partner with.
A standardized communication channel can reduce the complexities associated with sending and receiving documents. You and your trading partners will all be on the same page regarding the format of documents and the method in which they’re transmitted.
EDI VANs also reduce the need for direct vendor-to-vendor connections. Instead, each party can connect to the designated value-added network, reducing the effort required to share information.
EDI VAN Services
EDI VANs vary significantly in terms of sophistication and use cases. The simplest EDI VANs function as a secure mailbox but provide few, if any, additional services. Conversely, leading EDI VAN providers offer myriad add-on services, including:
- Alerts and notifications
- Data encryption
- Automatic routing to recipients
- Return receipt verifications
- Compliance documentation
- Data backup and recovery
- Identity authentication
When searching for an EDI VAN solution, ensure the scope of the provider’s services aligns with your organization’s needs.
3 Types of EDI VANs
There are three primary types of VANs: one-to-one, many-to-many, and one-to-many.
- One-to-one: One-to-one VANs connect two businesses, often a buyer and a seller. This type of VAN is typically custom-built, making it more costly than off-the-shelf options.
- Many-to-many: When multiple companies need to connect to the same value-added network, they require a many-to-many configuration. In this VAN, any member of the network can exchange information with any other member. Manufacturers, buyers, and other trading partners typically use many-to-many VANs.
- One-to-many: B2B suppliers often employ a one-to-many VAN protocol, as they must communicate with multiple retailers and distributors, but their various trade partners don’t need to exchange data with each other over the VAN.
When selecting a VAN, consider which type best aligns with your data requirements, industry-specific needs, and transaction volumes. Remain mindful of your trading partners’ needs, as well, so you can implement a solution that seamlessly integrates with their existing workflows.
Type of EDI VAN | How it works | Typical use cases | Key considerations |
|---|---|---|---|
One-to-one VAN | Connects two specific businesses, usually a buyer and a seller, over a dedicated value-added network. | Large trading partners with long-term, stable relationships and predictable document volume. | Custom-built, higher cost, limited flexibility when adding new partners or scaling operations. |
Many-to-many VAN | Provides a shared network where any member can exchange EDI documents with any other member. | Manufacturers, retailers, 3PLs, and distributors that need to connect with many partners using a common network. | Broad partner ecosystem, but can introduce variable fees and slower message delivery during peak traffic. |
One-to-many VAN | Connects one company to many trading partners through a central hub-and-spoke structure. | Retailers or enterprises acting as the “hub” for large volumes of supplier or vendor connections. | Efficient for high-volume hubs, but increases dependency on the VAN for routing, mailbox management, and uptime. |
5 Benefits of EDI VAN
EDI VAN data provides a multitude of benefits, including the following:
1. Increased supply chain visibility
EDI VANs enable you and your trading partners to achieve better supply chain visibility. When all documents and EDI data are exchanged over a single, secure platform, you’ll find it much easier to complete onboarding, track transactions, share insights, and support one another’s success in the fast-paced world of logistics.
2. Enhanced data integrity
EDI VANs reduce the likelihood of data entry errors and breaches. You and your partners will enjoy peace of mind thanks to enhanced data integrity and reduced risk.
3. Unrestricted accessibility
Value-added networks are accessible 24/7, allowing international trading partners to operate without time constraints and avoid disruptions to mission-critical operations. Moreover, the VAN owner determines who can and can’t access the network, further promoting security and business continuity.
4. Streamlined compliance
Most retailers require suppliers and distributors to meet certain EDI compliance standards and conduct rigorous testing. They also frequently mandate that vendor partners use EDI VANs to facilitate communication. You can make compliance a fundamental part of your business model by adopting VAN EDI technology.
5. Streamlined communication between trading partners
EDI VANs eliminate friction between you and your trading partners by providing a consolidated communication channel. Consequently, you can decrease the likelihood of miscommunications, more efficiently respond to trading partner requests, and establish your business as a premier trading partner.
Disadvantages of VAN
VAN EDI technology is not the ideal deployment model for every organization’s electronic data interchange communication. EDI VANs, like any deployment model, exhibit a variety of benefits as well as some potential disadvantages.
Some of the most notable disadvantages include:
- Limited control
- Vendor dependency
- Limited scalability
- Limited integrations
- High upfront and ongoing costs
Due to these potential drawbacks, it’s vital to consider multiple options before settling on an EDI VAN solution. The costs associated with VANs may prove particularly concerning, as your expenses will increase based on usage, workload, and the number of services the provider delivers via your network.
Unsure which EDI approach is right for you? Orderful can help
If you’re in the dark about how to configure your EDI network, Orderful and our team of experts can help you identify which EDI standards and configurations and protocols will provide the best value for your organization and its network of trading partners.
To learn more, contact us and talk to one of our experts. Let Orderful fuel the evolution of your business.
VAN EDI FAQs
What is VAN EDI?
VAN EDI is a method of exchanging EDI documents through a Value-Added Network, a third-party service that routes and manages messages between trading partners.
How does a VAN work in EDI?
A VAN works as an intermediary that receives EDI documents from one partner, stores them in a secure mailbox, and delivers them to the intended recipient based on routing rules and interconnect agreements.
Why do companies still use VAN EDI?
Some companies still use VAN EDI because it provides managed communication, reduced setup work, and long-standing reliability for partners already connected to the same VAN.
What are the disadvantages of VAN EDI?
The disadvantages of VAN EDI include high transaction fees, slower message delivery, limited real-time visibility, complex partner onboarding, and ongoing mapping maintenance requirements.
Is VAN EDI secure?
Yes, VAN EDI is generally secure because messages pass through controlled networks, but it can lack the real-time encryption and transport-layer security offered by modern API-based EDI methods.
Is VAN EDI being replaced by modern integration methods?
Yes, many companies are moving away from VAN EDI to API-based EDI platforms that offer flat pricing, faster onboarding, real-time visibility, and automatic spec and mapping updates.
What is the difference between VAN EDI and API EDI?
VAN EDI relies on third-party networks to deliver documents, while API EDI uses direct, real-time connections that bypass VAN fees and eliminate mailbox delays.
How does Orderful help companies move off VAN EDI?
Orderful helps companies replace VAN EDI with a modern, API-first EDI platform that delivers real-time data exchange, automated mapping, faster partner onboarding, and predictable pricing with no per-document fees.
